interviews
Who Profits from Your Student Loans?
by Cody Hounanian
September 27, 2020
This interview with Cody Hounanian, the Program Director of Student Debt Crisis, was conducted and condensed by franknews.
frank | What does the student debt crisis look like today?
Cody | I think statistics can tell part of the story. For example, in the seventies, you could use a Pell Grant to cover most of your college expenses, now you can’t. Anecdotes tell another part of the story. In the past, a part-time job over summer could be used to cover the cost of college. That is not enough anymore. We hear from borrowers every day who work many, many hours while going to school, and that still doesn't cover even a fraction of what higher education costs today.
As a society, we used to be much more willing to invest in covering the cost of education. Over the years, and particularly since the Great Recession, investment at the state, local and federal levels has decreased. As a society, we pulled back from investing in students and left families and individuals to pick up that burden. It's an investment issue. It's also a cost issue.
Can you speak more to the cost issue — why is college so expensive?
There are expenses to operate a major modern higher education institution — especially at the level that we have in the United States. But our political leaders have decided to not invest money into our higher education system, and, as a result, families and students have to pick up the slack and borrow to pay for college.
It is a vicious cycle — the more that colleges increase the cost of college, the more student loans will be taken out to fund those educations. The more that we open up the opportunity for borrowers to finance their education, the more room there is for institutions to increase their costs.
That is why at Student Debt Crisis we support a two-pronged solution. One, we need to cancel a broad amount of the student debt that exists. Two, we need to make many colleges, certainly public institutions, free for students. That is critical to creating a future where the student debt crisis that we see today can’t be recreated.
Do you think that canceling student debt is politically and fiscally possible?
If you accept the premise that our higher education and student loan system are broken, then you have to accept the fact that much of the $1.7 trillion in student loan debt is unethical, immoral, and, frankly, shouldn't exist.
Since the COVID crisis, canceling student debt has gone from a rallying cry of borrowers and advocates to something that is growing in its legitimacy. It has the support of many people in Congress, including Senator Elizabeth Warren, and even presidential candidate, Joe Biden.
But there are other common-sense solutions we should look to, as well. For example, there needs to be a federal refinancing option.
Because of predatory interest rates, many people have loans where they have paid back more than they originally borrowed.
Refinancing is not a new idea — people can refinance their mortgage or auto loans.
Let’s back up — what does refinancing look like for student loans?
Anyone that takes out a traditional lending product for their home or their car, can take advantage of a lower interest rate in the future. That helps them to lower their monthly payments and the total amount of debt that they have to pay back during the lifetime of the loan.
People who have federal student loans are not given that option. Importantly, federal student loan interest rates have fluctuated wildly over the years. There are millions of people that have very high interest rates, very high monthly payments, and no option to lower their interest rates.
With the support of folks like Senator Elizabeth Warren, there have been several attempts to pass common-sense refinancing. It came within two votes of passing in Congress several years ago but did not pass.
How many people are defaulting on their student loans?
A million people each year that default on their student loans. And that does not include a large portion of borrowers who are seriously delinquent on their student loans — these are borrowers who are between 90 and 270 days past due on their payments.
Unfortunately, we see that student loan defaults follow the inequity lines that we see in our society. Black student loan borrowers default at a much higher rate than their white peers.
We also know those who attend predatory for-profit colleges, often single parents, disabled veterans, and other vulnerable communities default at a much higher rate as well.
What happens when you default on your loans?
The consequences of default can be really catastrophic. It can mean huge fees. In many states, you can have your driver's license or your professional license revoked. It can mean that you can't complete your program or access financial aid. It can even mean you can't serve in the military, law enforcement positions, or other jobs that require credit checks. It can disrupt people's lives significantly.
As with other forms of debt, defaulting on your student loans also means that you're likely going to face relentless harassment from debt collectors. These are people that call at all hours of the day, they contact your friends and family, and sometimes they reach out to you on social media accounts. Defaulting can lead to a serious encroachment of your privacy.
Right. And there are repayment options to pay off student loans in an effective way — but no one seems to know?
Nobody with a federal student loan should default. There are affordable repayment options that are available to student loan borrowers through the federal government. The problem is, no one knows that these programs exist.
For example, if you are a low-income borrower or if you are unemployed, you can qualify for a monthly payment that's as low as $0 per month, and still be considered current on your loans. But your loan servicer has to tell you about that option and they have to help you enroll properly. For years, they have failed to do that. There's been a myriad of lawsuits against these companies, but that doesn't fix the problem.
California just passed a student loan borrower “bill of rights” to create enforceable standards. These companies have to give you your options, and they have to educate you on the best options for your situation, not the options best for their bottom line.
The federal student loan system is so complex that it makes it hard for students to navigate — you essentially have to be an expert. What's really important to know is that student loan borrowers are constantly hounded by what we call debt relief companies. These are people that prey on your inability to find any information. Any company offering to enroll you in a federal program with a fee is unnecessary - you can enroll in any federal program at the Department of Education's website at no cost.
But it's not just the private companies or organizations making a profit, right? In 2013, the Department of Education made over $41.3 billion on student loans. How are they making that money?
Yeah, you're right. Hundreds of millions of dollars every year go to the Department of Education through our student loan system.
Most of that comes from the interest on student loans. I think it is important to circle back to the conversation around the lack of refinancing here — we know that the longer that student loan borrowers are stuck with high interest rates, the more the Department of Education reaps in return. That is a perverse incentive.
Those funds go towards funding other government programs. To that extent, I think this is a question about balancing our books as a country and reprioritizing what we want to spend our money on. We need to think about different means of funding that doesn't happen off of the backs of student loan borrowers.
There's literally money on the table to be used to reinvest in education that instead is just being given as a fund generator for the Department of Education.
Can you talk more about the spread between what banks are borrowing and what the interest rates are there and how that differs from private loans?
Yeah. When you think of what a bank can lend money for, you're talking about single digits a — 1% to 0.5% of an interest rate. When a student loan is written by the federal government, it can be anywhere from about 3.5%, today's rate, to 6.5%, which was the rate that it was for me when I attended college in 2013. In the private market, student loan interest rates can be in the double digits — they can be as high as 15% or more.
Federal student loan borrowers, and those with private student loans from banks, are paying much more to finance their own education than what institutions pay to buy financial products. There is a huge spread. Again, I think that is a societal ill.
What does our society prioritize? Is it more important to keep banks afloat or to help young people afford education and make the future better and more bright for our entire country?
Why is the federal system profiting off of this system and these high interest rates rather than acting as a protector against predatory private institutions?
That's a great question. About a decade ago, when a student loan borrower went to the Department of Education for a student loan, the Department of Education would help facilitate that process, but the funds came from a private bank.
During the Great Recession, the banks unloaded this portfolio, they no longer wanted these loans. A lot of the loans were sold back to the Department of Education. From then on, throughout and after the Obama administration, all new federal student loans were not only facilitated by the Department of Education, but the funds themselves came from the government through the Department of Education.
The Department of Education shifted from being a regulatory agency, to essentially acting as one of the largest banking operations within the government.
They have a portfolio of trillions of dollars in student loans. Instead of acting as an institution meant to look out for the interests of student loan borrowers, they are now incentivized to look out for their large portfolio of student loans.
Was the transition of the government towards acting as a bank a partisan led movement?
The Obama administration felt strongly that borrowers needed an easy way to finance their education, or we would have a future where the future economy was void of high skilled labor and job opportunities.
We were also coming out of the recession, and there were deficit issues. So another motivating factor was also the idea of funding — the Department of Education could process these loans and create a revenue stream that could fund other programming in the government.
Do you think the move was well-intentioned?
I would say up until recently, these programs were well-intentioned. I think there were obstacles in making substantive change. But, since Betsy DeVos has become the Secretary of Education, we've seen more of what looks like overt attempts to make sure the system is as broken as possible.
I'll give you an example, there is something called the Public Service Loan Forgiveness Program. It started under the Bush administration, and the goal of the program was to motivate college graduates to work in public service by forgiving their student loan debt after 10 years of service. The current administration has proactively created roadblocks that have denied 99% of applicants to the program. There has been much more of an explicit attempt to prevent borrowers from accessing relief from the federal government — the likes of which we have never seen before.
Does the failure of the Department of Education lend itself to the idea that the government can't be in charge of things?
To those that look at the broken student loan system and say that is a great example of government failure, I would say, look to the other side of the coin — the exploitative private student loan system.
The federal government and the federal student loan system is not perfect by any means. It has created a lot of problems for student loan borrowers. However, the private student loan system that has no consumer protections when it comes to affordable payment plans. They have higher interest rates, they engage in profiteering, and a whole host of other issues that you don't see at the governmental level.
We look at the student loan system within the federal government and think that this is a bloated, broken system that can be corrected. It should be limited in size — meaning we should lower the cost of college and cancel a ton of the student debt to make this program more manageable. But we don't want borrowers to go to the private student loan industry where they lack the affordable options and consumer protections that are afforded to federal student loan borrowers. So the grass ain't greener in the private industry for student loan borrowers by any means.
Why do you think there's so much political resistance to embrace education as a public good?
This is where things are more insidious and, frankly, shameful. It comes down to the fact that there are partisan politics at play. There are some on one side of the aisle that treat a college education as something that should be reserved for the elites rather than as a public good and something that really benefits our society. At the Student Debt Crisis, we believe that America needs highly educated and highly skilled citizens who can compete globally for modern jobs.
interviews
Observations on Media Activism
by Dr. Clark-Parsons
October 16, 2019
Dr. Clark-Parsons is a Postdoctoral Research Fellow in Activism, Communication, and Social Justice at Annenberg School for Communication at the University of Pennsylvania. Her teaching and research revolve around feminist social movements in the United States and their media practices, drawing on her own participation in and observations of contemporary feminist media campaigns. She can be reached via email at rosemary.clark@asc.upenn.edu
This interview with Dr. Rosemary Clark-Parsons was conducted and condensed by frank news and originally published on September 13, 2018.
frank: I would love to talk to you about your focus on feminist social movements and media practices. But particularly, digital media and social media, in both positive and negative ways.
Rosemary: Yeah, I'm happy to talk about that. Always.
Right now I am post-doctoral fellow in activism, communication, and social justice at the Annenberg School for Communication which is at University of Pennsylvania. I just wrapped up my PHD there over summer, and I sort of came to this research interest through a long-standing interest going back to college in gender in media. I was really interested at first in focusing my research on media representations of women, girls, and other gendered bodies.
But I found that that research area was so depressing and kind of stagnant. We know that the state of affairs when it comes to media representations of gender is pretty bad and has been pretty bad for a long time. That's where the story ends on the research side of things.
I was interested in turning toward the activists who are trying to do something with media to change the state of affairs when it comes to gender and power and representation. So, that's essentially how I got into my interest in studying activism.
frank: How did you end up combining them?
Rosemary: For me the answer came through a research method that we call ethnography which essentially involves participant observation. The data collection method comes from actually being involved in and participating in the thing that you're studying.
That meant getting involved with grassroots activist groups in the city of Philadelphia.
frank: What have you found effective in both your research and your activism?
Rosemary: A lot of my research has been focused on the fact that there are both strengths and weaknesses to using any sort of communication tools, whether we're talking about digital, or analog, or non-digital tools, for activist purposes. All of these tools have a fair amount of limitations, but a lot of the discourse in the early days of the internet was this is how the revolution is going to happen.
frank: What are those limitations?
Rosemary: One of the biggest limitations actually comes from one of the biggest strengths. Now we no longer need to have access to a big name organization, with lots of money, lots of people power, resources, and experience to launch a movement. And on the one hand, that's great. We can launch a big protest without requiring the same degree of physical organization. We don't have to be meeting for months at a time in person to organize some kind of political action whether that's a street protest or a boycott or what have you.
So, while we can launch an action really quickly, sometimes we have issues in these movements with long term struggles for social justice, with responding to new challenges as they emerge.
frank: One thing that keeps coming up in terms of effective activism is having very clearly outlined goals. With the ease of social media we can quickly gain a lot of attention but just as quickly forget the true desired outcome. How do you think people avoid that? What sort of leadership or communication does that take?
Rosemary: Yeah, that's a great question. I think that's another issue that comes from this sort of double-edged sword of doing digitally networked activism. On the one hand, if you look at hashtag campaigns, anyone can chime in and sort of bring their own personal reasons for participating to the table. I can share my story under the #MeToo hashtag, for example. But then when it comes to articulating a very clear set of, for example, policy goals, or just concrete steps toward social change, whether at the policy level or more at the cultural level, we're not seeing these movements come together to put out a mission statement. Does that make sense?
frank: Yes.
Rosemary: I think the more successful movements that we're seeing are combining the more old fashion elements of movement organizing, like meeting somehow in person together with a dedicated group of activists, organizing locally, and then also doing these sort of huge network campaigns at the same time. #MeToo is a great example of that, having both the long term struggle component led by Tarana Burke, and sort of branching off into the Time's Up movement. The Never Again movement that came out of the shootings in Florida is another great example of this as well. They're taking advantage of the participatory globally networked nature of social media platforms while also doing the difficult work on the ground to organize long term.
frank: Right. There seems to be a need for a more intense focus on the communities you're actually trying to help.
Rosemary: Yeah, I think that we especially saw this with the very impressive young activists who came out of the Stoneman Douglas shootings. You could see it play out in terms of the news coverage, the need for them to gain trust, not just within their local communities but to gain the trust of their audience. To gain respect of authorities on the issue of control despite the fact that they're these teenagers. Which was working against them.
I think trust, in terms of how you're received by the public, whether that's your immediate neighborhood, organizing for an issue on your block, or whether that's your national audience, as in the case of the Never Again movement, it's essential for social movements, and again requires some of that more old fashioned form of organizing. There were a couple of pieces written about how the teen activists in Stoneman Douglas came together and organized in the aftermath of the shooting. There's a story about them getting together at a slumber party at one of the activists houses and deciding “This is our strategy. This is how we handle the media. We cannot make mistakes, actually, because that will immediately be a reason to put us down. You know we already have our age working against us. We need to gain the trust of our audience."
Trust has always been a key component for a successful movement and continues to be. And it's become even trickier in our world of fake news and conspiracy theories circulating online. You really need to have some authority and gain the trust of your audience.
frank: What do you think about the commodification of cause? About activism as trend? I have a strong gut reaction when I see this stuff online, and think, I don't need to hear about x from you, but perhaps that doesn't matter and all voices added to the mix are important.
Rosemary: Yes, that's a great question. There are two big related changes I've seen with activism over the past five years. One is that it's becoming more mediated and the second is that it's becoming more personalized, like hashtag activism. All the people posting under the hashtag are united by the hashtag itself but they're sharing these very individualized, personalized stories or reasons for participating. That makes it really easy to coopt and commodify. When it's just this personal individual act, it's very easy to take that up and turn it into something that you can sell.
We saw this unfortunately, and unbelievably to me, with the #MeToo movement. There were makeup lines branding their products with the #MeToo hashtag. We saw jewelry and clothing lines popping up around the campaign, even a whole bunch of different mobile apps. And they certainly have somewhat of a positive valance. We want to see these issues represented within popular culture, within consumer culture. But there's the danger there of suggesting that what's needed to solve a problem as big as sexual violence and sexual harassment is just this individual act of buying something rather than collectively organizing for structural change.
frank: If you have a large social presence or voice, and you want to be involved, how do you avoid personalizing everything, or avoid taking away from the movement's goals?
Rosemary: I don't think that there's necessarily anything inherently wrong in personalizing your involvement. Feminists in the U.S. have been saying the personal is political since the 1960s. The issue is keeping that connection between the personal and the political, reminding the people who are following you that your personal story is connected back to this structural issue, not just you. It's part of this, in the case of #MeToo, global issue of sexual violence.
frank: Do you feel like people, especially women who have a large voice or public presence, should feel a responsibility to contribute to the conversation, or do you think that we put too much pressure on people to fall into the categories and narratives that we would like to see them in?
Rosemary: One of the very valid concerns about the #MeToo movement, for example, is that we're putting a lot of pressure on not just women but anyone who has experienced sexual violence and harassment to come forward and tell their story. And one concern there is all of the focus is on the survivors and the victims rather than on actually holding accountable the people who are responsible for this behavior and for these assaults in some cases.
We see a lot of hype in the media, a lot of excitement, however misguided, when someone comes forward and says yet another big name renowned celebrity has committed some act of sexual misconduct, and then it becomes about the interpersonal drama.
Rather than the fact that this is huge problem that exists way beyond the scope or the story of two people. I think that there's a danger there in encouraging high profile people to continue to come forward, but at the same time, it's yet another one of these double-edged sword situations. When they come forward, they also encourage other people to feel less shame about their own experiences.
So, it's one of those sort of gray zone situations, to me.
frank: What do you think is next in terms of feminism and feminist movements? What do you think is the next big push and focus?
Rosemary: I think what seems to be on the horizon for feminism in the U.S. right now is figuring out how to take what has been for several years now a very visible surge of feminist activism that has been very much focused on the personal, on everyday fight the power and oppression, everyday encounters with sexual violence, and channeling that into more sustainable, long-lasting, efforts for social change, at the policy level, at the level of more formal institutions of power.
Because on the one hand, we're living in a moment where feminism is everywhere. We can, as we've talked about, buy feminist branded products in the store.
We live in this moment, where it's everywhere, but we also live in a moment where the reality is that Donald Trump is president and we're seeing a systematic roll back of women's rights, of civil rights, the rights in marginalized communities, on a near daily basis. So, there's a disconnect there.
Somehow, we have risen to this high level of visibility within popular culture, but we're not at the same time able to create these longer lasting institutional changes. I'm hopeful that that's going to shift, that the disconnect is going to come together a little bit more. We're seeing a lot of headlines heralding what they're calling the Year of Women. A lot of feminist candidates have been running for different levels of political office. The next big issue for these movements is figuring out how to turn that energy, turn that focus, on everyday sorts of injustice, everyday sites of power, and channel that into more institutional long lasting forms of change.
frank: What new policy for women's equality are you looking for? Or, is the change you're more interested in cultural?
Rosemary: I think we need to not lose sight of either one. I don't want the pendulum to swing too far into the direction of institutional policy and let go of some of the great work feminist activists have been doing around these more every day social forms of change. We're now more aware than ever, I think of sexual harassment as a social issue, but I think they need to be paired together. I would love to see the same amount of energy and the same amount of success in the area of shoring up our policies around sexual harassment, shoring up the resources we have for survivors who are seeking legal recourse or who are seeking some kind of transformative justice within their particular cases. We know that this is an issue that is everywhere and that's undeniable, but the question becomes now what?
frank: What do you feel is being overlooked right now? In terms of what your research is focused on.
Rosemary: This has been the common thread, I think, in what we've talked about already, but one point that I feel I try to make in my research is that we need to be paying close attention to this shift away from a time when big name formal organizations structured with movements which came with its own set of pros and cons. There are organizational resources on the one hand, and dedicated leaders, but then there are also all sorts of exclusion and gatekeepers filtering out who gets to participate and whose voices are heard.
We're seeing a shift away from that and towards these media platforms, actually becoming the way that movements are structured. So, whereas you might have had in the past, organizations controlling a movement's communication, today, the actual message itself, whether it's a hashtag, or whether it's a platform - these forms of media are at the center of a lot of social movements today and that comes with a whole range of affordances and limitations. I think that's a major shift that's being overlooked in conversations about the future of social organizing in the U.S. and one that I try to highlight a lot in my own work.